Good news. The economy still stinks.
In today’s economy, which is driven by The Federal Reserve Board’s quantitative easing (QE) program, bad news is good news and good news is bad news. That’s because if the economic news is bad, The Fed will be more likely to continue buying bonds, propping up the stock market.
A month ago, the U.S. Bureau of Economic Analysis (BEA) estimated an annualized growth rate of 2.4% for the first quarter of 2013, but on Wednesday the BEA revised its estimate and said the economy grew at a rate of only 1.8%, a full 25% drop.
Growth of 1.8% is 45% lower than the 3.3% average annual growth in gross domestic product (GDP) the U.S. economy has enjoyed post-World War II. Yet the Dow Jones Industrial Average and the S&P 500 each jumped a full percentage point on the news. The DJIA was up 149.83 points and the S&P 500 was up 15.23 points.
The goal of QE, we were told, was to cut unemployment to 6.5%. After more than five years and three rounds of QE (plus Operation Twist), the une